Guidance is good but advice is great

Earlier this month it was the Work and Pensions Select Committee who wanted to understand the success of the service and hear how individuals had been engaging with it and what they were getting out of it.

Michelle Cracknell, chief executive of The Pensions Advisory Service, which has done a very good job in tough circumstances running the telephone guidance part of Pension Wise, was in the spotlight here. Those at TPAS truly understand how Guidance should be delivered and what people can take away from it. The focus from the Committee though was on the numbers and again these are positive.

It seems that a very encouraging 70,000-plus people had been in contact with TPAS about guidance, 9,180 of which had gone on to make appointments. However 1,000 interviews hadn’t taken place because the person concerned did not pick up the phone – something even the most hardened critic of Pension Wise might think was beyond their control.

However, let’s broaden this out further because the pension freedom issue is not simply about engagement with the Government-established guidance services. As we’ve heard over the months – and the numbers being issued regarding Pension Wise appear to back this up – there are many people who are not taking advantage of the Guidance sessions at all. These are the people who have existing pension providers, life offices, and the like, and are making a bee-line for them first.

Now we are all acutely aware that when it comes to many of these existing customers, there is no inclination or desire for the life offices to deal with them – there is no attraction here for them to sell products but there is a regulatory responsibility to deal with them. From what I gather, and this is anecdotal, most of these offices are pushing those customers seeking advice in this area to databases like Unbiased and the like. But, firstly, there is no guarantee they will use them to source an adviser, and secondly, there is no guarantee either they will find a local later life specialist to discuss their case, or that they will be deemed to have enough money to make the provision of advice worthwhile to the adviser themselves.

This of course is part of the crux of the problem – and is one of the reason Pension Wise was established – in that those individuals with smaller pots may not be able to source the advice they might desperately need. Unfortunately, even with Guidance – and let it be known I am a very big supporter of its provision – they are still not going to get that advice and therefore what should they be doing next, and how can they executive the choices that lie before them.

Again, anecdotally, I expect some of the life offices who are being inundated with customer queries to launch propositions which are able to support them. How this might play out in the longer term remains to be seen and, indeed, they may well look at a proposition like our own Later Life Academy and believe it would be better to link up with us to provide these individuals with access to advice, rather than opt to do it all themselves and, perhaps somewhere down the line, be under fire themselves should that service provision not deliver.

By referring, for example, to the Academy what they are effectively doing is ‘selling’ those customers advice – true, professional advice from those regulated to do so and which comes with all the back-up and protections that essentially the Government would have liked to deliver, but are not able to. This becomes a tangible benefit for life offices to offer customers, instead of sending them off in the direction of Unbiased and hoping for the best. It is a simple process whereby all we need is a proper referral process and, with the benefit of our training, resources and expertise, the Academy members are in the best possible position to deliver for the customer.

Guidance is good but advice is great and the industry must continue to work together in order to get the ‘advice outcome’ to as many individuals as possible.